London, UK – British businesses are experiencing significant challenges as they navigate higher shipping costs and delays caused by Houthi attacks in the Red Sea. According to a report by the British Chambers of Commerce (BCC), over a third of the companies surveyed have been impacted, with exporters bearing the brunt of the effects.
The disruptions have led to potential price increases in the UK economy, with concerns raised by the BCC about the mounting cost pressures if the situation persists. William Bain, the BCC’s head of trade policy, highlighted how the shipping-freight industry has managed to mitigate some issues, but prolonged challenges could lead to escalating costs.
The survey revealed that exporters, retailers, wholesalers, and manufacturers are particularly feeling the impact, facing shortages in goods, components, and financial strains. Rerouting shipments around the Cape of Good Hope in Africa has extended delivery times by three to four weeks, with some companies reporting over 300% increases in container hire costs.
One affected business, Warings Furniture, has been grappling with the aftermath of these disruptions since before Christmas. Managing director Rachael Waring shared her experiences of budgeting for higher container costs and offering additional services to clients to offset delays. She aims to negotiate lower prices with Chinese manufacturers to cushion the impact on customers.
The BCC, representing over 50,000 businesses, is advocating for additional government support for exporters, including the establishment of an exports council to bolster trade. Mr. Bain emphasized the importance of government intervention, especially in light of the UK’s decline in total goods exports in 2023 and weakened global demand.
The conflict in the Red Sea, stemming from Houthi attacks targeting commercial vessels, has prompted retaliatory air strikes by the US and UK on Houthi targets in Yemen. Major shipping companies have rerouted vessels, increasing costs and causing delays due to the longer route.
With tensions ongoing, renowned UK brands like Tetley and Yorkshire Tea are closely monitoring their supplies. The BCC’s annual survey, encompassing responses from over 1,000 companies, sheds light on the challenges faced by small businesses, emphasizing the need for proactive government support to alleviate industry pressures.